First, a succession of disparate items :
- I made a tweet, it went like this :
Exactly contrary to common belief, it's not unbanked = bilked, it's really banked = bilked. What a brave world of disinformation we live in.
It garnered some attention, a number of retweets, people sent me messages about it, unlike most everything else dumped into that "online conversationi" it didn't die within five minutes. Why, I wonder ? And what exactly is it even supposed to mean ?!
- Then there's of course this conversation on -assets :
- asciilifeform Somebody explain the mindfuck from earlier. The 'check cashing shop' thing, isn't a straight scam?
mircea_popescu No. About 200mn of the US citizenry live in the fictitious world of bezzleii. They never use cash for anythingiii. About 50mn US citizens (and a fundamentally uncountable bunch of illegals) live in the real economy. They mostly use Tide for currency, but at the fringe there's this exchange of people who work for the fictitious economy, but then try to obtain their wages in actual cash.
asciilifeform The way it was explained to me, by one wretch, is that many folks who refuse to use ordinary banks do so because they were hounded by creditors (ordinary ones, and government alimony collectors).
mircea_popescu Nope. It's mostly because they are not part of that world. Like you know, some people don't wear dockers, because they're not social justice warriors, the women they fuck don't even know what dockers are, etc.
asciilifeform How does using paper benjamins release you from bezzle?
mircea_popescu It's not that it releases you from it, it's just that it makes no sense for you to keep virtual benjamins if you do nothing in the bezzle. By now it's pretty much two different currencies, the 401k-dollar and the cocaine-stained-dollar, different entirely.
asciilifeform A little hard to buy a reel of 0805 resistors with paper hundies.
mircea_popescu But that guy does not buy a reel of resistors. A little hard to buy what he buys with bank-dollars, you might as well try to buy it with a WoT ratingiv.
- Then there's of course the article discussing the many ways in which the USG economic propaganda bureau outright lies about key figures, such as the inflation data. But those lies don't stand alone, it'd be unremarkable and unsurprising that a government is outright lying. There's more to it, like so :
Mircea Popescu @Birdyword @Pawelmorski By now self-reported inflation is so badly decoupled with real economies it's practically a random number.
Paweł Morski @Mircea_Popescu actually: interested in any systematic, non-anecdotal evidence. shadowstats has been thoroughly debunked.
Mircea Popescu @Pawelmorski Never put much stock in shadowstats, but anyway. What would your desired evidence look like ?
Paweł Morski @Mircea_Popescu inflation materially different from reported. Anecdotes don't count.
Mircea Popescu @Pawelmorski Doesn't seem you're looking for anything other than confirmation bias. Which is fine, of course.
Paweł Morski @Mircea_Popescu doesn't seem you've got even that.
So whatever, some random twitter profile insists inflation numbers as reported by some government are correct, notwithstanding they never were, in the history of either government or reporting. What of it ? Maybe that's how he makes his living.
Fine, discount that one, but then look in the comment section of the earlier article. That's a twenty something Polish academic arguing with me. Why are we to discount him ? He's not even from the US. He's not quite old enough to have much invested in the entire noble lie thing, there's really no sane way to adhominem him out of this conversation.
What could possibly posses people, what could lead otherwise quite rational, quite sane, apparently educated and informed into an argument with plain, obvious evident reality ? Well... here's the shocker : they're not in any sort of conflict with reality. They simply live... in a different reality. According to the world they live in, what they say is perfectly correct, and I'm just a little nuts. Like so.
That's what it is : there's a virtual economy, denominated in bezzle-USD. There's also a real economy, denominated in tide-USD. These both pretend to be using the same unit of account, the USD, but in point of fact they do not. On the basis of this pretense of identity some de facto convertibility between bUSD and tUSD does exist, but it displays limitations which are often unexpected surprises for the naive (as the equivalency breaks down in practice causing fault lines in the convertibility that seem to come "out of nowhere"). Let us expend some effort to understand the surface and edges of both types of USD, as well as how they interact with each other.
bUSD is what you receive in your bank account any time your tax-paying employer pays you. bUSD is what you hold whenever you exchange valuable goods or services (such as your own labour) for government promises, which includes ANY form of credit issued in the US or by US corporations without exceptions and any other form of virtual "money". A promise of MF Global to buy a product for you as your broker, a promise by Freddie Mae to repay a debt to you, a promise by JPM to share their future profits with you, a 401k fund of any type, social security future payments predicated on previous deposits or not, a promise of some "authorised agent" to repay you gold in exchange for paper gold certificates, a piece of paper saying X bank holds Y of your dollars and any other form of government-backed virtuality. They're all equally obligations of the US Government, the various pseudo-corporations and fronts used to disguise this matter notwithstanding. You are well advised to be at least as smart as the courts when judging your own affairs : if a court will see through a front intended to deceive in bankruptcy, divorce and other patrimonial disputes, so should you.
tUSD is what you receive in your hand any time your tax-dodgingv employer pays you.
tUSD is what you receive from supermarkets and other retailers (in exchange for your bUSD) whenever you buy (using a credit card, check etc) any items, such as Tide, or cough medicine, or asparagus. Considering that the supply of bUSD is unconstrained either in law or practice, whereas the supply of tUSD is constrained by reality, should the supply of available tUSD become stretched too thin for a gushing of bUSD coming at it, you may expect restrictions. Such as your not being allowed to buy cough medicinevi or only being allowed one can of Tide a week or only one fill of gas a month, or being required to keep "your gold" as paper gold certificates issued by an "authorised" government agent.
tUSD is also what you expend, whenever you do anything. When you eat, when you shower, when you go for a ride in your car (electric or otherwise), when you drink a beer you're ticking away tUSDs. All the snoave about "rock soup" and so forth aside, all the polished and fashionable socialist gargle aside, one still can not eat bUSD, nor will it ever happen. There isn't a technology solution to the tUSD privilege, there isn't going to be one, notwithstanding all the people trying, and occasionally deluding themselves into thinking they found something. There isn't a political solution to the tUSD privilege, there isn't going to be one, notwithstanding exactly idem, except with a garnish of millenia instead of centuries.
Agents of the government are under standing orders to confiscate any significant agglomeration of tUSD they come across, be it in the form of a pile of bills or any other form. Again, "authorised" agents of the government may keep suck stockpiles in particular circumstances, as ordered by their owner, said government. Independent agents however may not. Instead, they are legally required to keep all their tUSD assets with a bUSD issuer, so that should the bUSD-economy have problems, their tUSD assets can be marshalled to prop it up. Like so.
This split isn't in any sense novel or remarkable, by the way. Argentines have lived for many decades under a dual system of exactly this kind, except in their case the bUSD is called "peso" (the tUSD is actually the tUSD). The only problem that may come to upset this arrangement, of course, is that Bitcoin has been slowly displacing the tUSD as a "good money" standard. That displacement has been accelerating, and will further acceleratevii at an ever increasing pace. This means the process will be complete in rather short order, perhaps as short as just a few years. You'll definitely know when it's too late, incidentally, because the last leap of such an unwind is always quite explosive.
That will end the bUSD to tUSD direct convertibility at parity for certain. It is however unlikely that said parity could survive even as long as that, as it's generally uncommon for uneconomic arrangements of a planetary scale to survive their integrationviii, and the bUSD-tUSD disparty was just recently integrated (by the Internet). You would perhaps be well advised to take such positions as may be defensible once that implicit convertibility ends.———
- "The opposite of online speaking is not online listening, the opposite of online speaking is looking for some other place to say something", paraphrasing some Lebowitz chick. [↩]
- This perfectly useful word comes from Chapter VIII of "The Great Crash 1929" by J. K. Galbraith :
In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.
It is a very useful word, as the book it comes from is a very useful book. It may for instance readily explain what precisely is meant by "too big to fail" in simpler words : at some point a minimum level of bezzle being present in the system at all times became necessary, much like in the case of the drug addict a minimum quantity of an otherwise foreign and mostly toxic substance coursing through his veins is an utmost necessity for the sustainance and continuation of... life itself, it would seem, or at any rate the present misrepresentation thereof.
At that same exact point, commercial morality became an impossibility, and with it morality of any kind and type, and with it society outright, at least of the civilised variety. This would be the deep reason why there can't exist a future for the US, nor any solutions to its numerous and well varied problems : it's no longer worth it, which is exactly what's meant by "too big to fail". That solutions and future no longer exist, being no longer worthwhile. [↩]
- They may carry twenty dollars in a sock if they're going through a rough neighbourhood, to be able to prove to any cop that may inquire they don't actually live there. Laugh or not, that's the convention.
And speaking of twenty dollar bills : pretty much the only bill in use in the US proper is the twenty dollar bill. I doubt you can find an ATM that spits out hundreds anywhere, I doubt you can conveniently have your bank deliver you a few stacks of hundreds, a merchant will definitely expect a gratuity of some kind to "break a hundred". Meanwhile, everywhere the USD is used as a substitute local currency, from Argentina to South-East Asia, the dollar circulates exclusively in hundred dollar bills, and you'll be expected to pay a little extra if you're using "nonstandard" bills. Now why would it be that the "same" currency has two stably divergent standards ?
And, while you're considering that point... what exactly are "eurodollars" ? [↩]
- Actually, you'll probably fare much better with the WoT rating [↩]
- There are a number of perfectly legitimate yet non-tax-related reasons which drive an employer to ignore purported regulation controlling his behaviour, such as minimum wage laws, immigration laws and so forth. Once the employer breaks any of them, it is generally in his best interest to break all of them - as he'll hang just as well for a lamb as for a calf (and hang he will, in any case) - so we'll just call it tax-dodging for simplicity, even if tax dodging is in effect rarely the driving force. [↩]
- "It's bad for you", notwithstanding that you don't have to be buying it as a precursor for metamphetamine production, you could very well be buying it as a trade good, which should in principle be protected. [↩]
- The speed isn't linear, so that if in 1 time units it does 1 distance units then in 10 time units it does 10 distance units. The acceleration isn't linear either, so that if in 1 time units it does 10 distance units and in 10 time units it does 1`000 distance units then in 100 time units it does 100`000 distance units. The acceleration itself has an acceleration all of its own, and for all we know that one has one too. [↩]
- Integration is in this context a term of art. To understand it, consider the situation of someone perceiving that the "Bitcoin" is trading on MtGox for 350 "dollars", whereas in other places the Bitcoin is trading for 500 dollars. Obviously the MtGox arrangement is uneconomic, however it can continue indefinitely because it's not integrated : someone possessed of dollars could not transform those into Bitcoin through MtGox, even if he could easily transform them into "dollars" or "Bitcoin". Similarily, a farmer who is raising sheep on a mountain top rather than cattle, in spite of sheep being cheaper than the grass and cattle quite expensive, can continue doing so "as per tradition" indefinitely. Once he becomes integrated, however, once his daughter wants tampons and his son a car and both kids iPads the story's ended, and our sheep herder with three thousand years of sheep herding history and a decent command of the literary tradition flowing from that will suddenly turn into a first generation cowpoke. With no culture, of course, or perhaps better said "as an integral part of the culture". [↩]